8-KMaterial AgreementsFinancial EventsOther Events+1

Targa Resources Corp. 8-K Report, Material Agreement (Oct 16, 2017)

Filed October 16, 2017For Securities:TRGP

Summary

Targa Resources Corp. (TRGP), through its subsidiary Targa Resources Partners LP, announced on October 10, 2017, the completion of an offering of $750 million in aggregate principal amount of 5% senior unsecured notes due 2028. The notes were sold at par, generating gross proceeds of $744,375,000. This debt issuance is a significant event for investors as it directly impacts the company's capital structure and future financial flexibility. The net proceeds from this offering are earmarked for crucial financial activities, including the redemption of Targa's 5% senior unsecured notes due 2018, reducing existing credit facility borrowings, and for general corporate purposes. These purposes may encompass further debt repurchases, working capital needs, and funding for capital expenditures or acquisitions. The strategic use of these funds aims to optimize the company's debt profile and support its ongoing operational and growth initiatives.

Key Highlights

  • 1Targa Resources Partners LP issued $750 million in aggregate principal amount of 5% senior unsecured notes due 2028.
  • 2The offering was completed on October 10, 2017, with the notes sold at par.
  • 3Gross proceeds from the offering amounted to $744,375,000.
  • 4Net proceeds will be used to redeem $750 million of 5% senior unsecured notes due 2018.
  • 5A portion of the proceeds will also be used to reduce borrowings under credit facilities.
  • 6Remaining funds are designated for general partnership purposes, including potential redemptions of other notes, working capital, and capital expenditures/acquisitions.

Frequently Asked Questions

The primary purpose is to refinance existing debt, specifically to redeem Targa's 5% senior unsecured notes due 2018. Additionally, proceeds will be used to reduce borrowings under credit facilities and for general corporate purposes, which could include future growth investments.

This offering allows Targa to extend its debt maturity profile by replacing shorter-term debt (2018 notes) with longer-term debt (2028 notes) at a fixed rate. It also provides flexibility for deleveraging under credit facilities and funding strategic initiatives, potentially improving its debt structure.

Yes, there is a potential conflict of interest because some initial purchasers or their affiliates may hold the 2018 notes that Targa intends to redeem, or are lenders under Targa's credit facilities. This means these entities could benefit from both the issuance of the new notes and the redemption of the old notes.

The 5% interest rate is a key feature of the new debt. Investors holding these notes will receive a fixed annual interest payment of 5% of the principal amount. For Targa, it locks in a known cost of debt for the next 11 years, providing certainty in its interest expense.